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Reporting Pensions Under GASB 68 6/7/20141KASBO - Spring 2014.

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Presentation on theme: "Reporting Pensions Under GASB 68 6/7/20141KASBO - Spring 2014."— Presentation transcript:

1 Reporting Pensions Under GASB 68 6/7/20141KASBO - Spring 2014

2 6/7/2014KASBO - Spring 20142

3 6/7/2014KASBO - Spring 20143

4 Authority GASB Statement 68 – Accounting and Financial Reporting for Pensions GASB 68 Implementation Guide Effective for fiscal year /7/2014KASBO - Spring 20144

5 Presenters Mark Whelan, CPA Chief Financial Officer, Kentucky Teachers’ Retirement System Todd Coleman, CPA Controller, Kentucky Retirement System Susan Barkley, CPA Assistant Director, Kentucky Department of Education , ext /7/2014KASBO - Spring 20145

6 Terminology OldNew 6/7/2014KASBO - Spring Actuarial Accrued Liability (AAL) Unfunded Actuarial Accrued Liability (UAAL) Total Pension Liability (TPL) Net Pension Liability (NPL)

7 Key Changes The part of total pension liability not covered by plan assets = net pension liability (NPL) NPL is a liability on entity-wide statements Changes in calculating NPL o Some components are expensed o Some are deferred outflows/inflows 6/7/2014KASBO - Spring 20147

8 NPL TPL – fair value of plan assets = NPL 6/7/2014KASBO - Spring 20148

9 Actuarial Valuation Actuarial valuation will contain: o TPL o Components of change in NPL o Information needed for note disclosures Proportionate share determined by actuaries or retirement plan 6/7/2014KASBO - Spring 20149

10 Changes in NPL Most will be an expense in the period of the change o Service cost o Interest on TPL o Benefit changes o Projected earnings on pension plan investments 6/7/2014KASBO - Spring

11 Changes in NPL Some components are deferred outflow/inflow Amortized over average of expected remaining service lives o Difference between expected and actual performance o Changes of assumptions o Change in proportionate share o Difference between proportionate share of all contributions and employer’s contributions 6/7/2014KASBO - Spring

12 Investment Earnings Amortized over 5 years only Report net deferred outflow/inflow from this component 6/7/2014KASBO - Spring

13 Amortization Must track each component separately Must track each year separately Use the appropriate time period for each 6/7/2014KASBO - Spring

14 CHANGE COMPONENT FOR NPLEXPENSEDEFERRAL Service costImmediatelyNone Interest on the TPLImmediatelyNone Projected investment earningsImmediatelyNone Changes in benefit termsImmediatelyNone Changes in assumptions Initial period amount Expense over avg. remaining service period of actives and inactives Difference between assumed and actual economic and demographic factors Difference between projected and actual earnings Expense over 5 years Other changes in NPLImmediatelyNone 6/7/2014KASBO - Spring

15 Special Funding Situation Nonemployer contributing entity (state) Legal requirement to contribute directly Federal grants? No Districts must record revenue and expense equal to its proportionate share of state contributions – change in NPL 6/7/2014KASBO - Spring

16 Fund Statements Nothing changes due to GASB 68 6/7/2014KASBO - Spring

17 Entity-wide Statements NPL as a liability On-behalf revenue for state contributions Deferred outflows/inflows amortized (by function) If the NPL change results in a net credit, use expense anyway, not revenue 6/7/2014KASBO - Spring

18 Enterprise Funds Full accrual basis These funds show part of NPL and other stuff on their statements, too 6/7/2014KASBO - Spring

19 To Get Started in FY 15 Prior period adjustment on Statement of Activities o Need beginning of year NPL (at 7/1/14) Dr.Net position (beginning) Cr. Pension liability Beginning deferred outflow/inflow can be $0 first year 6/7/2014KASBO - Spring

20 Note Disclosures Lots! Descriptive information about the plan Significant assumptions in TPL Changes of assumptions Pension expense Deferred outflows/inflows by component for this period and future periods Proportionate share information 6/7/2014KASBO - Spring

21 RSI 10-year schedules o These build over time, can start FY 15 with one year Proportionate share Covered payroll Plan net position as % of TPL Show state and district shares 6/7/2014KASBO - Spring

22 OPEB Not included in scope of GASB 68 Will likely be addressed in a future standard Districts will have to record it (amount paid for medical insurance fund) 6/7/2014KASBO - Spring

23 6/7/2014KASBO - Spring

24 Our Plans KTRSCERS 6/7/2014KASBO - Spring Defined benefit Cost-sharing multiple employer plan Special funding situation State will recognize 100% of NPL Note disclosures req’d Defined benefit Cost-sharing multiple employer plan NO special funding situation Districts recognize proportionate share of NPL Note disclosures req’d

25 Looking Ahead CERS info will come from KRS actuaries o Expect a template to show proportionate share info January 2015 Use the FY 14 actuarial valuation for the district FY 15 financial statements 6/7/2014KASBO - Spring

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